Tate & Lyle Plc · LSE:TATE
Tate & Lyle — H1 FY2013 Earnings Presentation
44 slides from Tate & Lyle's earnings presentation, Nov 8, 2012
Slide 1: Results for six months ended 30 September 2012
Results for six months ended 30 September 2012 8 November 2012, London
Slide 2: Agenda
Agenda Headline Results and KPIs Javed Ahmed Financial Review Tim Lodge Operating Highlights and Progress Update Javed Ahmed Outlook Javed Ahmed 2
Slide 3: Headline Results and KPIs
Headline Results and KPIs Javed Ahmed, Chief Executive
Slide 4: Headline Results
Headline Results Six months ended 30 September Continuing operations¹ Change 2012 2011 Change (constant (£1=US$1.58) (£1=US$1.62) currency) Adjusted operating profit2 £195m £194m + 1% + 2% - SFI operating profit down 7% in constant currency - BI operating profit up 7% in constant currency Adjusted p
Slide 5: Key Performance Indicators
Key Performance Indicators Six months ended KPI Measure 2012 2011 Change* Growth in Speciality Sales £471m £450m + 6% Food Ingredients Financial performance1 Profitability Adjusted operating profit £195m £194m + 2% Working capital Worsened by Cash conversion cycle† 37 days 35 days efficiency 2 days
Slide 6: Financial Review
Financial Review Tim Lodge, Chief Financial Officer
Slide 7: Income Statement
Income Statement Six months ended 30 September Continuing operations1 2012 2011 At constant £m, unless stated (£1=US$1.58) (£1=US$1.62) currency Sales 1,631 1,540 7% Adjusted operating profit² - SFI 108 116 (7%) - BI 101 96 7% - Central (14) (18) 20% 195 194 2% 4 Net finance expense (16) (17) 5% 3 A
Slide 8: Speciality Food Ingredients
Speciality Food Ingredients Six months ended 30 September At £m, unless stated 2012 2011 Reported constant currency Impact of Sales 471 450 5% 6% exchange: Sales 1 108 116 (7%) (7%) £6m lower, Adjusted operating profit Operating profit flat 1 Margin 22.9% 25.8% Volumes grew by 3% Soft market con
Slide 9: Bulk Ingredients
Bulk Ingredients Six months ended 30 September At £m, unless stated 2012 2011 Reported constant currency Impact of Sales 1,160 1,090 6% 7% exchange: Sales Adjusted operating profit1 101 96 6% 7% £10m lower, Operating profit Margin1 8.7% 8.8% £2m lower Strong sweetener performance in sweeteners glo
Slide 10: Interest and Tax
Interest and Tax Six months ended 30 September Continuing operations1 At £m, unless stated 2012 2011 constant currency 2 Net finance expense (16) (17) 5% Add back - Net hedge unwind (1) (2) Underlying interest (17) (19) Post retirement benefit credit of £1 million (2011: £3 million) now excluded f
Slide 11: Exceptional Items
Exceptional Items Six months ended 30 September £m, unless stated 2012 2011 Exceptional Items Continuing operations Gain on disposal of Colombian acidulants joint venture 8 - Business transformation costs (10) (7) Reversal of impairments & provision - McIntosh - 73 Exceptional (costs)/gains from con
Slide 12: Free Cash Flow
Free Cash Flow Six months ended 30 September 2012 Continuing operations1 £m EBITDA £246m 51 8 7 11 22 60 17 7 228 195 144 Adjusted Dep'n / Exceptionals Working Pensions Share-based Operating Capex & Net Tax Free cash operating amort 2 capital payments cash flow intangibles interest flow profit paid
Slide 13: Change in Working Capital
Change in Working Capital Six months ended 30 September Continuing operations1 £m, unless stated 2012 2011 Decrease in inventories 10 60 Increase in receivables (48) (29) Decrease/(increase) in US margin calls 22 (16) Increase/(decrease) in payables 20 (25) Movement in derivatives and non-pension pr
Slide 14: Movements in Net Debt
Movements in Net Debt Six months ended 30 September 144 54 5 5 23 85 476 386 Net debt Free cash Dividends Cash from Purchase of Other Exchange Net debt March 2012 flow incl. MI discont'd & Shares Sept 2012 disposals 14
Slide 15: Summary of Financial Position
Summary of Financial Position1 Improvement over prior years Adjusted operating Adjusted diluted Net Debt profit EPS +2% £m £m 200 pence +1% 600 40 30 £90m 400 540 476 194 195 20 410 464 386 30.7 30.7 200 23.6 10 170 150 0 0 H1 FY11 H1 FY12 H1 FY13 H1 FY11 H1 FY12 H1 FY13 Sep 10 Mar 11 Sep 11 Mar 12
Slide 16: Operating Highlights
Operating Highlights Javed Ahmed
Slide 17: Speciality Food Ingredients
Speciality Food Ingredients Highlights and key global drivers Volumes up 3% with sales up 6% to £471 million Speciality Food Ingredients Sales £471m Lower operating margins reflecting step change in Food systems (20%) 95 fixed costs and Turkey strike Adjusted operating profit 7% lower than str
Slide 18: Starch-based speciality ingredients
Starch-based speciality ingredients Sales up 12% to £273 million with volume growth of 3% Speciality food starches Steady volume growth in US Strong growth in Asia, with increased demand for packaged foods Speciality corn sweeteners Good growth in US and Latin America Demand driven by co
Slide 19: High intensity sweeteners
High intensity sweeteners Sales down 5% to £103 million with volumes 8% lower SPLENDA® Sucralose Lower volumes reflect: (i) exceptionally strong growth in comparative period; and (ii) softer and competitive market conditions in Europe Prices broadly in line with prior year period PUREFRU
Slide 20: Food systems
Food systems Sales up 4% to £95 million with volumes down 1% Solid growth in US and Asia offset by softer market conditions in Europe Raw material prices remained high during the period: Some success in mitigating higher input costs through shortening of customer contract lengths and using sub
Slide 21: Bulk Ingredients
Bulk Ingredients Highlights and key performance drivers Sales up 7% to £1,160 million reflecting higher corn prices Bulk Ingredients Sales £1,160m Volumes down 1%, in line with strategy to gradually switch corn grind to speciality food ingredients Co-products 261 Sweeteners (22%) (51%) 587 Adj
Slide 22: Sweeteners
Sweeteners Sales up 15% to £587 million with volumes up 1% Imports of US HFCS 42 and HFCS 55 into Mexico US – sales up 16% to £510 million 600,000 500,000 Higher sales reflects pass through of higher corn costs 400,000 MT (dry) Strong seasonal demand in US and continued strong 300,000 demand f
Slide 23: Industrial starches, acidulants and ethanol
Industrial starches, acidulants and ethanol Sales down 2% to £312 million with volumes down 7% European Monthly Paper & Board Production Industrial starch Lower volumes in both US and Europe, reflecting our strategy to diversify grind to food starches Higher margins in US on back of improved p
Slide 24: Corn market dynamics
Corn market dynamics Adverse growing conditions in US and Europe USDA estimated Corn Supply and Stocks-to-use ratio Worst drought in US mid-west for 56 years has Total Supply 2011/12 Total Supply 2012/13 impacted quantity and quality of this year’s harvest Stocks to use ratio 2011/12 Stocks to use
Slide 25: Building the platform for long-term growth
Building the platform for long-term growth Javed Ahmed
Slide 26: Building a platform for long-term growth
Building a platform for long-term growth Commercial and Food Innovation Centre Encouraging customer response to new global Commercial and Food Innovation Centre in Chicago: Significant number of customer visits in the period Increase in customer interaction New global IS/IT system Rollout of
Slide 27: Bringing new products to market
Bringing new products to market Broadening our range of natural high-intensity sweeteners PUREFRUIT™ Monkfruit Extract Making progress developing the market Number of new product launches leveraging strong consumer appeal for natural products Entry into US table top market Strawberry Flavour
Slide 28: Beginning to bring new products to market
Beginning to bring new products to market Sodium reduction and cost optimisation SODA-LOTM Salt Microspheres Sodium Large, global addressable market reduction Reduces added salt content by up to 50% Functions, labels and tastes like salt HAMULSION™ Stablilizer System Helping customers re
Slide 29: Outlook
Outlook Javed Ahmed, Chief Executive
Slide 30: Outlook
Outlook For year ending 31 March 2013 Speciality Food Ingredients While we expect continued challenging market conditions in Europe, overall we expect to achieve steady volume growth and solid sales growth for the full year Bulk Ingredients Expect firm demand for liquid sweeteners in US to conti
Slide 31: Questions & Answers
Questions & Answers
Slide 32: Supporting information
Supporting information __
Slide 33: Key Financial Indicators
Key Financial Indicators Six months ended 30 September £m, unless stated 2012 2011 Profit before tax1,2 179 177 1,2 Effective tax rate - continuing operations 18.8% 18.1% 1, 2 Diluted EPS - continuing operations 30.7p 30.7p 2 Operating cash flow - continuing operations 228 176 Net debt 386 410 Net d
Slide 34: Income Statement
Income Statement Six months ended 30 September 2012 2011 £m, unless stated Cont'd Discont'd Total Cont'd Discont'd Total Sales 1,631 10 1,641 1,540 50 1,590 Operating profit1 195 3 198 194 3 197 Net finance costs3 (16) - (16) (17) - (17) Profit/(loss) before tax2 179 3 182 177 3 180 Exceptional item
Slide 35: Sales – Segmental analysis
Sales – Segmental analysis Six months ended 30 September Continuing operations1 £m, unless stated 2011 Forex Activity 2012 SFI Sales - Starch-based speciality ingredients 244 273 - High-intensity sweeteners 108 103 - Food systems 98 95 450 (6) 27 471 BI Sales - Sweeteners 517 587 - Industrial starch
Slide 36: Profit before tax
Profit before tax Six months ended 30 September 2012 Continuing operations1 £m, unless stated 2011 Forex Activity 2012 - SFI 116 108 - BI 96 101 - Central (18) (14) Adjusted operating profit2 194 (2) 3 195 3 Net finance expense (17) - 1 (16) 4 Adjusted profit before tax 177 (2) 4 179 1 Excluding the
Slide 37: Reconciliation of adjusted information
Reconciliation of adjusted information Continuing operations1 Six months to 30 September 2012 Six months to 30 September 2011 Adjusting Adjusting £m Reported Adjusted Reported Adjusted items items Sales 1,631 - 1,631 1,540 - 1,540 Operating profit 187 8 195 255 (61) 194 Net finance expense (15) (1)
Slide 38: Exchange Sensitivity
Exchange Sensitivity Six months ended 30 September Estimated annual movement caused by a one cent movement in the US$/€ on the translation of continuing operations’ profits £m impact on PBITEA US$ EUR Speciality Food Ingredients 0.9 0.3 Bulk Ingredients 0.8 - Central (0.1) - 1 Impact on operating pr
Slide 39: Discontinued Operations & Disposals
Discontinued Operations & Disposals Six months ended 30 September £m, unless stated 2012 2011 Sales1 10 50 Adjusted operating profit1 3 3 Net proceeds from disposals - Sucromiles1 15 - - Vietnam 23 - - Other 5 - Cash generated by discontinued operations 11 25 Total net proceeds 54 25 1 Results of di
Slide 40: Balance Sheet
Balance Sheet £m, unless stated 30 Sept 2012 31 Mar 2012 30 Sept 2011 Goodwill, intangibles and fixed assets 1,231 1,252 1,237 Working capital 366 398 336 Pension deficit (217) (140) (233) Other provisions (25) (28) (37) Other 41 23 13 Assets and liabilities held for sale1 3 63 65 Net operating asse
Slide 41: Business Transformation
Business Transformation Year ended 31 March Total cumulative £m Six months to costs to Sept 2012 Sept 2012 Commercial & Food Innovation Centre 5 31 IS/IT & Global Shared Services 22 57 Total 27 88 P&L exceptional 10 34 Capital 17 54 Total 27 88 41
Slide 42: Cash flow information
Cash flow information Six months ended 30 September 2012 £m 2012 2011 Adjusted profit before tax1 195 194 Depreciation and Amortisation2 51 46 Exceptional items (11) (9) Working capital 8 (21) Pensions (22) (39) Share based payments 7 5 Cash from cont. operations 228 176 Interest and tax paid (24) (
Slide 43: Debt Maturity Profile
Debt Maturity Profile September 2012 £m 2012 2011 Undrawn committed bank Average net debt in period 421 453 facilities Effective interest rate on gross debt 4.1% 4.3% £m Drawn committed bank 800 facilities 700 Bonds and other At period end Average maturity of total gross borrowings 5.1 yrs 5.3 yrs 6
Slide 44: Exchange rates
Exchange rates Six months ended 30 September £m 2012 2011 Change Closing rates US$ 1.61 1.56 (3%) Euro 1.25 1.16 (8%) used to translate Balance Sheet Average rates US$ 1.58 1.62 3% Euro 1.25 1.14 (9%) used to translate Income Statement 44